Deposits and retainers both protect you when a family books a place and then changes their mind. They work differently, though, and mixing them up in your contract causes arguments later. In short, a deposit secures a place and a retainer pays for holding it.
What a deposit is
A deposit is money a family pays when they book, usually to show they're serious about the place. Your contract should say how much it is, when it's paid and what happens to it. Most childminders either refund it when the family leaves or take it off the final invoice. If the family never takes up the place, you can usually keep it, as long as your contract said so from the start.
What a retainer is
A retainer is a regular payment to hold a place before a child starts, or during a long gap such as parental leave. You're turning other families away to keep that space free, and the retainer pays you for that. Many childminders charge a percentage of the usual weekly fee, often half, for each week they hold the place.
The funded hours rules
If you offer funded places, both are restricted. The Department for Education's guidance says you must not charge a non-refundable deposit or registration fee as a condition of taking up a funded place, and you must not charge non-refundable retainer fees for entitlement places. You can still charge a retainer to hold a private place and take a refundable deposit, but neither can be a condition of the child getting their free hours.
A child who starts private and becomes funded
A common case is a child who starts with you privately, say in December, and whose funded hours begin in January. Taking a deposit in December is fine, because it's a private place. Once the funding starts, the funded hours rules apply, so return the deposit within a reasonable time. Many local authorities expect it back by the end of the first full funded month. Check what yours says, and put it in writing so you don't have to explain it to each family.
How to word them
Under the Consumer Rights Act, a term is fair when it's clear, so spell everything out. For a deposit, give the amount, when it's returned and the one situation in which you keep it. For a retainer, give the percentage or amount, which weeks it covers, and that it's never charged against a funded place. A single vague line saying "a deposit may be required" protects nobody.
Which should you use?
If your main worry is families booking and then not turning up, a deposit is enough. If you often hold places open for weeks or months before a start date, a retainer is fairer to you, and it's easy to explain to families as paying for the space you're keeping.
Your options
You can use neither and rely on payment in advance and a clear notice period. You can take a refundable deposit that comes off the first month's fees, comes off the final invoice, or is returned at the end, less anything owed. Or you can charge a retainer as a percentage of the weekly fee for each week you hold a place before the child starts.
Any of these is fair if it's written clearly, and none of them can be a condition of a funded place.
What I do
I don't take deposits or retainers. I'm paid monthly in advance and have a four-week notice period, which already protects me, and it's one less thing to explain to families.
How it looks in your contract
From a GoChildmind contract
Funded hours are free. I do not charge for funded hours. No payment, deposit, registration fee, retainer or top-up is a condition of your child taking up a funded place.
If your child has, or starts, funded hours, any deposit or registration fee is returned at the end of the first full month of funded hours, or sooner if your local authority requires it.
Put your own details in, freeRead the full sample contract
If you do take a deposit or retainer, you set the amount and the rule, and it appears in the fees table.